BOSTON AUTOMATION SYSTEMS, INC. 1) Glenda division: Selected transaction Equipment manufacturer.

rer. Customer acceptance to occur after the equipment is received and tested by the customer. If equipment fails to meet the customers specifications, customer may return it back for a full refund or replacement within 90 days. Payment by the customer is due under the divisions normal payment terms, 30 days after the customer acceptance.

a) Trycom Inc. Placed an order for a standard model of the divisions main product. Acceptance was based on product meeting the divisions published specifications. Demonstrated before shipment equipment met the required specifications. Revenue recognition Revenue can be recognized as soon as shipment reaches the customer as the acceptance was based on product meeting the specifications which the division has already tested before shipment. White Electronics Company Placed an order for standard product modified as necessary to fit into a space of specific dimensions, with no compromise wrt performance. White Electronics may reject the product if it does not fit to the specific dimensions. Glenda Division created the Testing chamber of the exact dimensions specified by customer to test the design modifications. Success, performance as well as dimensions. Revenue recognition Revenue cannot be recognized as the acceptance is based upon the condition that the product must fits in the dimensions specified at the customers factory. So revenue recognition only after customer tests the product and is satisfied. Silicon Devices Inc. Placed an order for standard product modified as necessary to be integrated to new assembly line, with no compromise wrt performance. Customer may reject the product if not satisfied by the performance or if the product cannot be satisfactorily integrated into the new assembly line. Division has never modified its equipment to work on an integrated basis in the type of assembly line proposed by the customer. The division was able to design and modify the product as requested by the customer however was unable to replicate the assembly line conditions in its testing. Revenue recognition Revenue cannot be recognized as the acceptance is based upon the condition that the product must be integrated into new assembly line at the customers factory. So revenue recognition only after customer tests the product and is satisfied. c) b)

2)

Advanced Technology Division: Selected transactions Develops, manufactures and sell the complex manufacturing equipments. Division provides the installation services to customers on time and material basis. Company assured that installation is not related to functionality of the equipment.

a) Analogy Technology Inc. Placed an order for an equipment to be integrated into a larger production line that includes other manufacturers equipment. Number of customer specific technical and performance criteria was added to contract. Due to the nature of the equipment, division was unable to demonstrate that the equip will meet all the specification before installation. Division must demonstrate the working of equipment before customer acceptance and if acceptance not received within 120 days of installation, equipment can be removed and sent back for full refund by the division. Revenue recognition Revenue cannot be recognized as the division was unable to demonstrate the acceptance condition i.e. the equip will meet all the specification before installation. So, again revenue can be recognized only after division demonstrates the working successfully and the customer is satisfied.

b) Specialty Semiconductor Inc.

Placed an order for an equipment to be integrated into a larger production line. Number of customer specific technical and performance criteria was added to contract. Product integration into the factory and assembly line not being complex at all, division was able to test the equipment before shipment and is shipped only after all the requirements have been met no uncertainty of product failure. Customer to pay the fees only upon completed installation. If customer is not satisfied with the installation, can remove the equipment without paying any amount. Revenue recognition Revenue cannot be recognized as the acceptance condition is the proper installation of product at the factory. So, the revenue can be recognized only after successfully complete installation and upon the customer satisfaction.

Micro Applications Inc. Placed an order for an equipment to be integrated into a larger production line. Number of customer specific technical and performance criteria was added to contract. Product integration into the factory and assembly line not being complex at all, division was able to test the equipment before shipment and is shipped only after all the requirements have been met no uncertainty of product failure. Customer to pay the fees no later than 90 days after delivery regardless of whether installation has occurred. Revenue recognition Revenue can be recognized as soon as the equipment is reached and installed.

c)

XL Semi Inc. Placed an order for the semiconductor equipment. Division published the performance specifications of its product based on the result s of prototype testing or based on previous installations. The equipment is extensively tested throughout the manufacturing process so the division is confident of its product to meet the customer specifications. Initial customer acceptance takes place at the divisions facility prior to shipment. While shipping the equipment is disassembled and reassembled at the customers site only by divisions engineers. Customer tests and accepts the equipment. Revenue recognition Revenue can be recognized as soon as the equipment is reached and installed. Technical Devices Division: Selected transactions Division developed, manufactured and marketed a variety of testing devices for product testing and research applications. Marketed by the combination of direct sales by its own sales force and independent distributors. Change in sales strategy Direct sales to be discontinued and replaced with independent distributors to free up its resources to compete in the market. th Distributors were asked to increase the product stocks by 30 Sept else the defaulting distributors are going to lose their technical devices distributorships. Distributors to pay the inventory cost in monthly instalments based upon the distributors expected sellthrough of inventories. Based on divisions generous past practices of allowing dealers to return the excessive inventories, distributors agreed to divisions terms of payment. Revenue recognition Revenue can be recognized only after the successful selling of the products as there is a provision for the distributors to return back the unsold inventories. 3)

d)